Sugar beet negotiations fail to reach an agreement

Intense negotiations between British Sugar and NFU Sugar over next year’s beet contract have reached an impasse, meaning they will now move to arbitration.

sugar beet being harvested
Stock photo for illustration only.

British Sugar and NFU Sugar have been unable to agree on the beet contract offer for next year after two weeks of negotiations. 

Contract and seed order screens are set to be reopened on 18th December 2023, British Sugar revealed, as the arbitration process could last for 2-3 months.

British Sugar initially sent an offer out to its 2,300 growers on 1st November, ahead of an agreement being made with NFU Sugar – but contracting was later paused to facilitate negotiations.

The dispute now surrounds the futures linked contract, which enables growers to make more dynamic pricing decisions for a portion of their contracts.

However, British Sugar said the two organisations were in alignment over the following issues:

  • An improved offer, giving growers a choice of either a £40 fixed price, or £38 plus market-linked bonus (yield protection costing £1 in either case)
  • A future negotiation process ensuring growers would normally get a crop price in July. As part of the outline agreed, negotiations would start in May every year and there would be a British Sugar/NFU escalation and dispute resolution process ending no later than 31st October, so growers always have certainty for the following year
  • British Sugar’s Code of Conduct adopted with queries resolved.

NFU Sugar said they had also aligned on seed orders being reset to zero, to give every grower the same opportunities to order seed as usual, and frost insurance being funded by British Sugar on the same policy terms as last year.

“Significant risk”

NFU Sugar said the points of disagreement on the futures contract are: the ability for growers to place up to 50% of their CTE onto it, and the principle of agreeing a factor to be used in the formula before growers sign up. 

NFU Sugar said it will only align with British Sugar on the other points in the contract, subject to alignment on the terms of the futures linked contract, which have not been agreed.

British Sugar agriculture director Dan Green said the futures contract is a “high risk” product which has only been attractive to a small minority (1%) of its grower base.

“We have offered to launch it for next year on the same basis as the 2023/24 price. However, the NFU’s insistence on locking in a fixed discount today presents significant risk to both grower and British Sugar,” he commented. 

“As we have said before, we sell almost all of our sugar through fixed price annual contracts and therefore we cannot cover the risks inherent in the futures contract. If we agree a discount factor on the model, both ourselves and the growers who choose it will face greater risk. A small movement in the US dollar exchange rate, or world sugarfutures price would present magnified price swings to growers, and potential losses to British Sugar of millions of pounds.”

Strength of feeling among beet growers

NFU Sugar Board’s chairman Michael Sly commented in a statement: “With the outstanding disagreement on the contract of such small financial cost to British Sugar and yet critical to the full benefits of the contract being realised, we are astounded that British Sugar would choose to move to a costly arbitration process in preference to reaching agreement on this.

“We have only achieved the significant progress we have made with British Sugar because of the overwhelming unity and support we have had from growers. 

“More than 1,300, representing over 70% of the national sugar beet tonnage, have pledged their support for the vital role NFU Sugar plays in securing a fair sugar beet price for growers. 

“Last week, hundreds of growers attended NFU Sugar meetings to voice their support, and well over 500 letters have been written by growers to their constituency MPs on this issue.

“British Sugar can be in no doubt of the strength of feeling amongst beet growers and support for NFU Sugar as the growers’ collective representative body.”

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